Monday, June 11, 2007

Brad Setser, the doyen of reserve analysis, has repeatildy highlighted the numerous drawbacks of the New York Fed custodial data. They tend to underestimate the true size of central banks' dollar holdings. But I remain a fan nonetheless: they have served me well over the years. Apparently, the IMF likes them too:

In recent years, the investment of a large share of these reserves into U.S. treasuries and agencies has contributed to the low yields in fixed-income markets. To measure this, we look at the growth of official international reserves held at the U.S. Federal Reserve system.